Overstock.com Inc. in January quietly began testing a revamped website in which the majority of the content on each page is tailored to the information that the retailer knows about the shopper—and consumers similar to her. It plans to roll the redesigned site out next month, which is around the same time that Overstock aims to sell its e-commerce business.
The redesigned site aims to produce a better experience for shoppers. For instance, if Overstock knows that a consumer is building a nursery, it can personalize its home page with relevant products in the shopper’s preferred color and style, along with relevant articles and content.
“We believe that if we can personalize a consumer’s page to her style, with the colors she likes, with items within her budget, Overstock will be top of mind for her the next time she’s looking to make a purchase,” says J.P. Knab, senior vice president of marketing at Overstock.com Inc., No. 30 in the Internet Retailer 2017 Top 500.
The redesigned site is the retailer’s attempt to show consumers Overstock knows them, he says. “E-commerce is behind the curve when it comes to personalization,” he says. “If you look at the Googles and Facebooks of the world, you see that every aspect of the experience is personalized.” That means the retailers that offer shoppers a tailored experience—in their marketing messages and on their sites—can gain an edge.
That requires retailers to track their customers across devices. Overstock, which increased its marketing spending 26.7% in the first three quarters of 2017, spent a significant share of those funds on bolstering its propriety identification graphs that marry the online sales information and behavioral information collected via its in-house-built “fingerprint” that enables it to track them across devices with data generated by vendors such as OnRamp, which aims to recognize shoppers across devices. While Overstock declines to share details related to its tracking practices, Knab says the program helps the retailer’s search, display, email and social media marketing strategies by enabling it to adjust each impression or interaction based on its knowledge about the consumer its targeting.
Overstock is only successful if it can identify the consumers most likely to make a purchase across devices and target them with ads at a reasonable cost, he says. That’s because Overstock is focused on turning a profit.
The retailer failed to do so in the first three quarters of 2017, in part because it had to boost its marketing spend to compensate for a dramatic hit that the retailer took in its organic ranking in May 2017. From January to April 2017, 43.3% of the Overstock.com’s traffic stemmed from organic search, according to data gathered by SimilarWeb Ltd. From May to December 2017, that percentage fell to 37.9%. The retailer is still trying to dig out from the hit.
Adding to its difficulties are rising paid search costs thanks, in part, to the competition it faces from Wayfair Inc., No. 16, which has long been focused on top-line growth, rather than turning a profit.
“We have faced off this endless stream of competitors who come in and they blow hundreds and hundreds of millions of dollars; we lost $160 million, we burned $160 million of capital in our history; Wayfair burned half that [in the] last three months,” said Patrick Byrne, Overstock’s founder and CEO, during the retailer’s third-quarter earnings call in November 2017. No matter how sophisticated the retailer’s technology is, it is still competing with retailers “spending four or five times what we’re spending in online marketing, running seven times as many commercials. There’s one thing that Wayfair is bidding on now that we’ve been paying 7 cents for. [Wayfair has] bid up to $2,” he says.
To adjust to the changing market conditions, Overstock has had to expand the window that it seeks to generate a return on its marketing spend. It used to look for a return within six months, but given its rising costs, it now looks for its return within 12-18 months.
At the same time, the rising costs have led the retailer to feel pressured to improve its ad targeting and find the most efficient keywords to bid on. “But even if we know the right customer group to target and have the most efficient bidding, when we push into high-spend areas, that isn’t enough,” Knab says. “We have to ensure that when traffic comes in that we’re creating a better on-site experience for consumers.”